Wednesday, May 6, 1998 | 9:27 a.m.
The Greenspun family's cable television operation has come a long way since the late 1960s.
That's when former Las Vegas Sun Publisher Hank Greenspun began building the foundation of what would become one of the largest telecommunications deals in history.
Greenspun's dream was built by several investors, weathered a couple of partnership changes and endured a lengthy courtroom battle through the '70s and '80s.
On Tuesday, Cox Communications Inc. and Brian Greenspun, one of Hank Greenspun's children, announced a new direction with the $1.325 billion sale of the company, now known as Prime Cable, to Cox.
"This is a great day for the company and for my family," Brian Greenspun, who heads the family's business interests, said in a news conference attended by several family members and company executives. "Never in my wildest dreams did I think we would get to this point."
Cox President and Chief Executive Officer Jim Robbins hailed it as a great day as well for his company, which will take over one of the most coveted cable operations in the nation, assuming that regulatory approvals occur as expected.
The Cox system has 3.3 million customers nationwide -- about two-thirds of them in the Southwest.
When Prime becomes Cox Communications of Las Vegas within three to six months, the Las Vegas operation will become the company's No. 5 operation in the country behind Phoenix, San Diego, New England and Hampton Roads, Va.
The Las Vegas system serves 319,000 residential customers and was sought after because it is one of the top 10 operations in the country and still has enormous growth potential.
One of Hank Greenspun's first partners in getting the cable television system in operation was the late Jack Kent Cooke, former owner of the Los Angeles Lakers professional basketball team and Los Angeles Kings hockey team.
Cooke, who later would become owner of the Washington Redskins, saw an opportunity to give his sports teams additional exposure in Las Vegas through cable television.
Cooke, who died of a heart attack in April 1997, was credited with steering Greenspun's Community Cable TV company through the regulatory process.
It was a process that landed in court in the early 1970s when the state Public Service Commission awarded two cable licenses (certificates of authority), to Greenspun and to his rival in the newspaper business, Review-Journal Publisher Don Reynolds, who owned Southwestern Improvement & Investment Co., operator of Nevada Cable-Vision Co.
The Nevada Supreme Court eventually ordered the Public Service Commission to withdraw Reynolds' certificate of authority because of a Federal Communications Commission rule prohibiting a television station owner from also owning a cable certificate. Reynolds owned what was then KORK, Channel 3.
Greenspun's company was selected as the certificate holder, leading the way to the building of the company.
When Cooke moved on to the East Coast, the Times-Mirror Co. became Greenspun's partner. Eventually, Prime Cable of Austin, Texas, bought out the Times-Mirror position in what was expected to be a five-year investment. At the end of the term, Las Vegas was building momentum toward its first big growth boom and Prime opted to ride the wave, growing into one of the nation's premiere cable companies.
Bell South entered the picture in the mid-1990s, investing in Prime as part of a trend that saw telephone companies diversifying into cable. Bell South's deal gave it an option to convert to 15 percent ownership of the company, diluting the Prime and Greenspun ownership positions slightly.
Then came Tuesday.
Of the $1.325 billion acquisition, about half is equity and half debt. That means the investment of Bell South, Prime Cable and other institutional investors is worth about $259 million. The remaining equity is going to the Greenspun family, part in cash and part in stock, with the family retaining 20 percent ownership of the operation.
Brian Greenspun said the deal took less than a week to complete after company officials reviewed proposals from three other rivals and decided to deal exclusively with Cox. He said Cox clearly had the most to offer and the Greenspuns liked the fact that Cox had been founded as a family-owned operation. Greenspun said Prime and the other investors were happy with the final outcome.
Many analysts covering the telecommunications industry learned of the deal while attending a convention in Atlanta -- Cox's home base. Most weren't surprised by the news since trade publications had reported speculation of the deal last month.
Generally, comments were favorable.
"It's a strategic fit for them (Cox)," said John Eckes, senior analyst at Moody's Investors Service. "They paid a higher-than-standard price, but this is a pretty significant system, the type in a large metro area that they do a good job with."
Cox remains a favorite of Wall Street analysts. Of the 16 analysts who regularly follow the company, just two have a "hold" rating on the stock.
Wall Street also responded favorably on Tuesday. Cox's stock, which trades on the New York Stock Exchange, was up 1/2 to 46 1/2 at closing time.
"It is a substantial amount of money," Jim Robbins, president and chief executive officer of Cox, said of the deal. "But it is in pursuit of a premium property and because of the growth this system represents."
Robbins acknowledged that the price was steep for the company, and could surpass the previous high per subscriber ever paid for a cable company.
"I don't know but I suspect it is very close to it," he said.
Cox, the nation's fifth-largest cable company, is paying about $4,000 per subscriber, compared with an industry norm lately of about $2,000.
Cox was willing to pay so much because it wanted to bolster its presence in the region. The acquisition gives it access to 506,000 potential customers.
Besides the 319,000 residential customers, Cox will gain the Hospitality Network, the largest provider of video entertainment and interactive services to resorts and hotels in the United States. The service reaches 105,000 hotel rooms, including 77,000 in Las Vegas.
Another part of the transaction is NextLink Nevada, a competitive local and interexchange telephone company, which provides telephone services to about 300 buildings.
Cox also will take over Prime's interest in Las Vegas One, a 24-hour cable TV news channel. Prime owns it in partnership with the Las Vegas Sun and the local CBS affiliate, KLAS, which is owned by Landmark Communications.
SUN WIRE SERVICES contributed to this report.
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